Richard Florida’s Creative Class: Why Creativity is the New Economy and What It Means for YOUR Community

Richard Florida’s idea of the “creative class” as the foundation for the “new economy” represents his raison d’être for the next economic age of development. Over the past 10-years or so, his idea of creativity has been the lightening rode for policy makers to make changes and for academics to critique and evaluate. Regardless of the position expressed by either the policy makers or academics, there is one thing that is clear: his idea of a “creative class” as the engine for economic development, growth, and diversity has given rise to a lively debate on where and how our living spaces, our communities, and our economies will evolve, unfold, and, potentially, prosper.

Before we continue, it’s important to understand the “creative class” concept. This concept provides the foundation for understanding the implications within the broader framework of social capital and, according to Florida, the rise of the creative economy. When we think of the “creative class”, we think of cultural industries, the arts, industries that we identify with as being “creative”. While these are a component of the “creative class”, the people make up a broader range of industries: 

• they are people whose economic function is to create new ideas, new technology, and new content; and 
• they are people in science, engineering, architecture and design, education, arts, music and the entertainment industry. 

The creative class also includes what Florida terms the “creative professionals”: those in business and finance, law, health care and related industries who are engaged in complex problem solving that requires a high degree of independent judgement and education. 

The creative class, as we have seen, is not a homogeneous group; they are a broad range of people from different industries and sectors. There is also another dynamic: according to Florida, tolerance of diversity in the area of ethnicity and sexual orientation is essential. Based on the description of the “creative class”, there is a wide range of professions and other social factors that determine membership. If we look deeper, though, it appears that there is common element to defining the “creative class”. Membership requires education, social diversity, cultural diversity, and, in the case of the industry classification, independent judgement and the ability to create new ideas, new technologies, and new content.

As you think about your own communities and the role that either the “creative class” plays out or other forms of human capacity provide direction for community public policy processes, it is important to evaluate Florida’s creativity hypothesis through a critical lens. If we understand the foundation of his hypothesis, the ideas he presents, and consider the claims and arguments, we can provide a more thorough assessment of where his idea fits within the broader human capital dimension. 

In order to understand the impact of the “creative class” on economic development, it is important to recognize the origins of  his ideas. The thesis of Florida’s work stems from an evaluation of what he calls “periods of crisis” and the subsequent “opening up of a new round of growth and prosperity” for societies. 

According to Florida, the 1880s, the 1930s, and the 1990s & early 2000s, represent significant “rounds of innovation” and “creation of new technologies”. During the 1870s, there was the first global depression, termed the “Great Depression”. The succeeding decade of the 1880s, was coined the Second Industrial Revolution because of increased technological advances in transportation that resulted in an economic boom for Western nations. The 1930s, as we know, was the 20th Century’s “Great Depression”, an age where manufacturing, agricultural, and financial markets saw significant decline. In the 1990s & early 2000s was a time of the “tech boom”, “the dot.com era”, the rise of the knowledge industries and area. These periods of history form the basis for the continuous evolution of economic development growth and prosperity. 

The common link with each period is with the notion of creativity, the “real source of economic wealth”. At each stage of creative evolution, Florida suggests that this growth and prosperity germinates within large urban areas and their adjoining suburbs, towns, and small municipalities to build new technologies, build new enterprises, to build new public goods, and to build new ways of living. He calls these “great conurbations”. The city, the “great conurbations” have evolved into the “social and economic organizing unit”: they are the new engines of the “creative age”. By linking each of these historical “periods of crisis” and their subsequent “rounds of innovation” and “creation of new technologies”, creativity is the new economy, our new economic epoch for the 21st Century. 

Florida’s ideas relating to the creative class are based on the connectivity with urban areas, “great conurbations” in cities. This connectivity exists because, urban populations are growing rapidly, comprising the majority of the world’s population, and according to Florida, employment in creative occupations has been growing considerably faster than the overall economy (Donald, Gertler, & Tyler, 1) . 

Westlund & Caledoni-Lundberg provide a list of factors related to the creative class and their links to urban areas. A region must have the following factors in order to be attractive to the creative class:

• a large, dense labour market that facilitates job mobility;
• a lifestyle with a broad supply of leisure activities;
• cafes and other meeting places for social interaction;
• diversity and tolerance of different ideas, lifestyles, cultures, and ethnicity;
• the region’s/places’ authenticity in the form of own culture; and 
• the region’s/place’s identity which have increased in importance when other forms of identity have decreased (Westlund & Calidoni-Lundberg, 11)

The factors of a city or region represent low social barriers, loose ties, and “validation of identity”, the cornerstone of Florida’s idea for “plug & play” communities. His notions of “plug & play communities” are based on the loose social capital that is required to create “bridging social connections rather than bonding social connections”. These diversified communities with loose networks and various lifestyles are what support the new economy, the creative economy. By valuing creativity, the creative class grows, formulating a “new class geography” with a common ethos that values creativity, individuality, difference, and merit . If a community or region possesses these conditions, the “creative class” will choice these locations, resulting in economic growth. And economic growth will occur in these locations because, as Florida emphasizes, the creative class is the main driver of the creative economy and as a predictor of urban fortunes. 

These ideas presented by Richard Florida’s creative class and creative economy have been praised and ridiculed, depending on the position and vantage point. At the heart of his approach is the validation of the connectivity between the creative class and economic growth and prosperity, and innovation and technology. Assessing the connectivity of these elements, the most obvious critique of Florida’s ideas relate to a comparison with Joseph Schumpeter’s creative destruction or “nature’s law” which says, “the rise and growth of one thing generates from the decline and decay of another”. Schumpeter’s notion of creative destruction is grounded in the idea that the “strategic element in entrepreneurial activity was “innovation”; that is the application of new ideas in technique and organization which would bring about changes in the production function” apply to the theory of economic development. 

Richard Florida’s idea of a creative class and creative economy appears to be a reframing of Joseph Schumpeter’s creative destruction.  Florida’s idea of the creative class is a destruction of industrial forms of labour production with the creative forms of labour innovation and ideas. The rise and growth of the creative class is a result of the decline and decay of the service and industrial labour force. In Florida’s words, “the distinguishing characteristic of the creative class is that its members engage in work whose function is to “create meaningful new forms” (Florida, 3). Adding to this comparison is Hoyman & Faricy’s position that Florida’s creative class theory is “woven together from seemingly unrelated past research on diversity, human capital, and cultural elements of economic growth” .  They further argue that the “theory rests on the presence and attributes of people—rather than businesses—as being the key to economic success”.

While Richard Florida’s “creative class” concept gives us ideas to consider, it is important to recognize that he has also resurrected old ideas on creative destruction, highlighted historical shifts in economic development during periods of crisis, and reinforced Adam Smith’s idea that labour activity remains the crucial factor of production in creating value. The difference between these ideas, events, and conceptual foundations and Florida’s “creative class” concept is that he sees the current “creative economy” as a shift from industrial production to creative production.

As you try and reconcile the most appropriate framework to address the social and human capital needs in your community, it is imperative to look from within to determine the level of human capital, the social bonds or bridging, and potential opportunities to build and sustain your economies. In other words, build from a position of strength and emphasize your advantages. Not every community is a Toronto, a New York, a Paris, or a London. But each community can build upon its own unique cultural, human, and social capital to increase it’s tolerance to diversity, improve the level of technology for the community, and enhance the human talent available for employment and economic opportunities. 

Cited Works:

Donald. B., Gentler, M., and Tyler, P. 2013. Creatives After the Crash. Cambridge Journal of Regions, Economy, and Society 6, 3-21.

Florida, R. 2002. The Rise of the Creative Class: Why cities without gays and rock bands are losing the economic development race. Washington Monthly, May 2002.

Hoyman, M. & Faricy, C. 2008. It Takes a Village: A Test of the Creative Class, Social Capital, and Human Capital Theories. Urban Affairs Review 2009 44:311.

Impact and Benefit Agreements: A Tool for Economic Self-Determination?

People’s right to self-determination is a fundamental principle in international law, embodied in the Charter of the United Nations (UN). The UN’s International Covenant on Civil and Political Rights and its International Covenant on Economic, Social and Cultural Rights state that, “All peoples have the right of self-determination. By virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development.” In Canada, the right of self-determination for First Nations is only partially recognized. The federal and provincial governments’ recognition of self-determination for First Nations is based on the notion of self government which is delegated powers and authority from a higher level of government. This idea of delegated municipal powers is not consistent with indigenous peoples’ right to self-determination. 

First Nations’ political and economic self-determination are affected by the changing and shifting by external governance and economic systems. First Nations are changing the notion of self- government in the Canadian context to include a demand for jurisdiction over institutions, culture, economic development, and resources. Institution building, participation, control, and the subsidiarity principle (i.e. that decisions should be made as closely as possible to the citizen) provide support for First Nations in their desire for economic and political self-determination. 

Impact and Benefit Agreements 

Economic self-determination, the ability of a people to take control over their resources, and political self-determination are interdependent. Achieving economic and, by extension, political self- determination requires various support mechanisms. Impact and Benefit Agreements (IBAs) are one such mechanism. IBAs are negotiated binding agreements that establish a formal relationship between a company and a community. In Canada, an IBA is an agreement between a company and a First Nation community that defines the relationship regarding the development of a large-scale resource project, often a mining initiative, within the boundaries of the affected community and ensures that the benefits of the project reach the local population. 

The Canadian Institute of Resource Law (CIRL) suggests that mining has the potential to have significant impacts, both positive and negative, on aboriginal people, their communities, and their way of life. IBAs have been employed by government, mining companies, and First Nations communities to address these impacts and provide a basis for mutually beneficial long-term relationships among all the players. 

IBAs have two principal purposes for government and First Nations people and communities: 

1. to address the concerns regarding the adverse affects of the project on
   the community, culture, way of life, natural environment, and land-based economic activities; and 
2. to ensure that local people and communities have the opportunity to obtain both short-term and long-term benefits from the project development. 

Both purposes reflect what the National Round Table on the Environment and the Economy posits: that the benefits should be retained in the affected communities and not only the long- term costs of development. 

From an industry perspective, the Intergovernmental Working Group on the Mineral Industry of Canada suggests that IBAs between aboriginal communities and companies are designed to: 

1. enhance economic opportunities in the local community by encouraging participation in resource development; 
2. provide specific opportunities to local businesses and residents for employment, training, business development and contracting services; and 
3. promote growth and development of the local community through education, counselling and maintenance of traditional culture and lifestyles. 

The following are the most common elements included in an IBA: establishment of employment and training programs; provisions for economic development and business opportunities; development of social, cultural, and community support programs; financial provisions for compensation and equity participation; program implementation and evaluation; and, environmental and cultural protection. 

Government, corporations, and First Nations communities agree that mining projects can have enormous social, cultural and environmental impacts on local communities. They may generate pollution, cause land expropriation and displacement, affect wildlife and crops, create social tension and economic inequalities, and disrupt family and community life. Historically, First Nations communities have lived with the legacy of environmental damage and social dislocation from past projects and resource booms. Mining can also bring economic benefits, in the form of employment, contracts, or the purchase of locally produced goods. Very often, however, communities are unable to reap these potential benefits, due to limited experience, a lack of appropriate skills, inadequate access to information, and limited funding opportunities. 

Issues of capacity and sustainability are of overwhelming importance for First Nations communities. IBAs present an opportunity to expand the capacity building component of  the communities, with regard to systems, community structures and roles, to allow them the ability to enhance their autonomy and integrity while taking advantage of opportunities in the broader economy. Such capacity building extends the benefits of employment and business opportunities. In many cases the aboriginal community may not have the institutional or human resources to implement the IBA. However, the employment training programs and business development initiatives provided for under IBAs do not necessarily address the issue of capacity building within the community as a whole, but focus instead on preparing First Nation individuals to fill roles within the mining company’s processes and structures. 

Implications of IBAs on Economic Self-Determination 

IBAs advance the ability of First Nations to have control over resources that are within their boundaries. The question becomes: do IBAs advance economic self-determination? Do these agreements provide greater authority, responsibility, and accountability for managing and administering the resources within their geo-political boundaries? Is there greater empowerment of First Nations to become stewards of their own economic well being? 

According to some proponents of IBAs, large scale developments by resource companies can represent a core of local and regional economic activity to which subsidiary activities gravitate. These additional activities may include construction, operation of infrastructure (roads, ports, and airports), transportation services, retail opportunities, and housing. In other words, even if incomes from the sale of the minerals or other company profits do not remain in the region, there are still significant spin-off economic benefits. Establishing employment and training programs under IBAs can ensure that capacity building in human resources and business development for communities are entrenched. IBAs may include provisions that support local businesses’ access and participation in the procurement and service provision to the development project. 

Even with benefits to individuals and businesses in the local community, there remains the question of stewardship: the ability to manage and make decisions affecting the resources in the community. The principle of stewardship provides a foundation for development in First Nations communities, whether it is the desire to diversify the economy, develop communities, or increase participation in the policy-making process. First Nations’ meaningful stewardship of local development provides a conduit for economic self-determination. Residents become involved in developing and deciding the future of their lives, their communities, and their development. In terms of governance, First Nation communities are striving to become the stewards of their future with the authority, responsibility, and accountability to manage and administer the natural resources. However, without IBAs, there is a potential to repeat the history of boom and bust, leaving behind increasingly dependent, empty economies. 

Conclusion 

Even though resource exploitation may generate economic benefits in local areas, in most cases these large scale operations are linked to the external socio-economic environment. The resource exploitation creates considerable wealth but that wealth is captured by owners of capital outside the region or community where the development has taken place. Still, IBAs hold some promise for First Nations communities’ economic development. 

Impact and Benefit Agreements provide a way for First Nations to gain control and authority over their communities so that many of the social, environmental, cultural, and economic impacts of large, resource development projects are accrued to the local community. IBAs can also support the advancement of institutional arrangements and political empowerment of communities for the purpose of self- determination.